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London Subscribing to Policy No. WN128398 v. The Best Quality Care, Inc.

United States District Court, W.D. Washington, Seattle

August 14, 2019

CERTAIN UNDERWRITERS AT LLOYD'S LONDON SUBSCRIBING TO POLICY NO. WN128398, Plaintiffs,
v.
THE BEST QUALITY CARE, INC., et al. Defendants.

          ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT

          Honorable Richard A. Jones, United States District Judge

         I. INTRODUCTION

         Before the Court is Plaintiffs' Motion for Default Judgment. Dkt. # 28. For the following reasons, the Motion is GRANTED.

         II. BACKGROUND

         Plaintiffs are underwriters at Lloyd's, London, who seek to rescind Policy No. WN128398 issued to The Best Quality Care Inc. (the “Second Policy”). The Best Quality Care Inc. is an adult care facility owned and operated by Mark Sokolskiy, and Irina V. Sokolskiy. Dkt. ## 1, 29-2, 29-3. Plaintiffs also seek a declaration that The Best Quality Care, Inc., The Best Quality Care LLC, [1] Mark Sokolskiy, and Irina V. Sokolskiy (collectively, “Best Quality Care” or “Defendants”) are not entitled to coverage in connection with claims asserted by Ilya Katsel as personal representative of the Estate of Inna Katsel (the “Estate”).

         Plaintiffs issued Policy No. WN11414 to “The Best Quality Care, Inc.” for the February 6, 2016 to February 6, 2017 period (the “First Policy”). Dkt. # 30-1 at 3. During the policy period, on July 29, 2016, a resident at The Best Quality Care, Inna Katsel, fell and died of her injuries. Dkt. # 30-3. On or about August 9, 2016, Plaintiffs received a request to increase the liability limits of the First Policy and advised that they would do so only if Best Quality Care provided a “No Known Loss” letter. Dkt. # 30-4. On August 24, 2016, Plaintiffs received a “No Known Loss” letter stating that there were no facts or circumstances that could give rise to a claim. Dkt. # 30-5. In reliance on Best Quality Care's representations, Plaintiffs increased the liability limits of the First Policy. Dkt. # 30, ¶ 4.

         In January 2017, Best Quality Care submitted a renewal application for coverage. Dkt. # 30-2. The application included negative responses to questions regarding any awareness of circumstances that could give rise to a claim, or complaints or fines imposed in the last year. Dkt. # 30-2 at 57. The application expressly stated that the representations made therein are material and that any policy will be issued based on those representations. Id. In reliance on Best Quality Care's representations, Plaintiffs issued Policy No. WN128398 (the, “Second Policy”). Dkt. # 30, ¶ 5.

         Plaintiffs claim that there were material omissions in Best Quality Care's application for the Second Policy, including (i) the death of Inna Katsel and (ii) a September 1, 2016 report from the Washington Department of Social & Health Services (“DSHS”) concluding that Best Quality Care did not have safety measures in place at the time of her fall. Dkt. # 30-6 at 2-3. Defendants also failed to disclose that DSHS subsequently levied a fine of $2, 000 for failing to actively support the safety of a resident. Dkt. # 30, ¶ 5; Dkt. # 30-7.

         After the Estate sued Best Quality Care on December 13, 2017, Plaintiffs issued a reservation of rights letter to Best Quality Care, including a reservation of the right to rescind the Second Policy. Dkt. # 30-11 at 5-6. On March 8, 2018, Underwriters tendered back to “The Best Quality Care, Inc.” the premium for the Second Policy. Dkt. # 30-12.

         Plaintiffs then filed this lawsuit on August 1, 2018. Dkt. # 1. Defendants were all personally served. Dkt. ## 12-15. On January 17, 2019, an order of default was entered against Defendants. Dkt. # 26. On January 28, 2019, Plaintiffs moved for default judgment against Defendants (the “Motion”). Although the Estate filed a response to Plaintiffs' Motion, on June 10, 2019, Plaintiffs and the Estate stipulated to dismiss all claims against the Estate with prejudice. Dkt. # 27. Plaintiffs' Motion is now before the Court.

         III. LEGAL STANDARD

         At the default judgment stage, the court presumes all well-pleaded factual allegations are true, except those related to damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987); see also Fair House. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002). Although the entry of default judgment under Rule 55(b) is “an extreme measure, ” disfavored cases should be decided upon their merits whenever reasonably possible. Cmty. Dental Servs. v. Tani, 282 F.3d 1164, 1170 (9th Cir. 2002); also see Westchester Fire Ins. Co. v. Mendez, 585 F.3d 1183, 1189 (9th Cir. 2009).

         In addition, Federal Rule of Civil Procedure 55(b)(1) permits the court to enter default judgment when the plaintiff's claim “is for a sum certain or a sum that can be made certain by computation.” Fed.R.Civ.P. 55(b)(1). In moving the court for default judgment, a plaintiff must submit evidence supporting the claims for a particular sum of damages. Fed.R.Civ.P. 55(b)(2)(B). If the plaintiff cannot prove that the sum it seeks is “a liquidated sum or capable of mathematical calculation, ” the court must hold a hearing or otherwise ensure that the damage award is appropriate, reasonable and demonstrated by evidence. Davis v. Fendler, 650 F.2d 1154, 1161 (9th Cir. 1981); see also Getty Images (US), Inc. v. Virtual Clinics, 2014 WL 358412 (W.D. Wash. 2014). In determining damages, a court can rely on the declarations submitted by the plaintiff. Dr. JKL Ltd. v. HPC IT Educ. Ctr., 749 F.Supp.2d 1046 (N.D. Cal. 2010). Where there is evidence establishing a defendant's liability, the court has discretion, not an obligation, to enter a default judgment. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); see also Alan Neuman Productions, Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). Since deciding for or against default judgment is within the court's discretion, a defendant's default does not de facto entitle a plaintiff to a court-ordered judgment. Curtis v. Illumination Arts, Inc., 33 F.Supp.3d 1200, 1210-11 (W.D. Wash. 2014).

         IV. ...


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